GBPJPY had been stuck in a prolonged uptrend since the beginning of the year, generating a structure of consecutive multi-year highs. However, the pair has been experiencing a downside correction in the short term after posting a fresh 7½-year peak of 183.99, with the price breaching a crucial ascending trendline.
The momentum indicators currently suggest that bearish forces are intensifying. Specifically, the stochastic oscillator is descending after posting a bearish cross, while the RSI dipped below its 50-neutral mark.
If selling interest persists and the pair drops beneath its 50-day simple moving average (SMA), the June low of 172.60 could provide initial downside protection. Breaking below that zone, the price might face the May support of 171.20 before 167.82 gets tested. A violation of the latter could open the door for 166.83, which acted as both resistance and support during 2023.
Alternatively, should the price reverse back higher, the bulls could attack the recent support zone of 179.85, which could serve as resistance in the future. Piercing through that wall, the pair could attempt to jump above the upward sloping trendline that connects its higher highs since January before the 7½-year high of 183.99 comes under examination. Even higher, the March 2015 peak of 185.00 may curb further advances.
In brief, GBPJPY has been undergoing a strong pullback, which intensified after the pair dipped below the ascending trendline. Hence, a clear close beneath the 50-day SMA could ignite more selling interest.
